Types of Exclusion Clause

Before rendering legal advice to Mr Lee, we would first have to identify and understand the meaning of the term “exclusion clause”. An exclusion clause is extensively used in contracts to restrict or limit the rights to claim of the weaker party against the stronger party thereby dissolving or limiting his/her liabilities. There are three types of exclusion clauses normally inserted into contracts. They are: * True exclusion clause: this clause is used in contracts relating to situation of breach of contract and then tries to exclude liability for the breach.

* Limitation clause: This clause limits the liability that can be claimed in the event of a breach of contract

* Time limitation: This clause mentions that a claim must be made within a certain period of time or the right to claim becomes extinguished.

From the above example, we note that the exclusion clause used by the hotel management most likely fall under the category of limitation clause in which the hotel management tries to exclude itself from any liability for theft of personal belongings of hotel guest that arise howsoever caused. However, for an exclusion clause to be legally binding in the contract it must be specifically incorporated and form part of the contract. Three method of incorporation for exclusion clause: * The exclusion clause can be incorporated by signature. If the clause is clearly mentioned in a document which has been signed and agreed upon by all parties, then it is deemed to be part of the contract. For example, the hotel management must bring to the attention of the hotel guest on the presence of the exclusion clause at the counter by requiring the guest to sign and agree to the terms and condition set by the hotel.

* The exclusion clause is incorporated by notice. The exclusion clause must be brought to the attention of the other party by way of written notice before or during the formation of the contract. If in the event the hotel guest is only